Bill will protect small businesses
Bill will protect small businesses
JAKARTA (JP): The bill on small businesses, when enacted, will
imply responsibilities on the part of large firms to support the
growth of smaller partners, Minister of Cooperatives and Small
Enterprises Subiakto Tjakrawerdaya said yesterday.
"Partnership between large and smaller companies is not an
obligation, but it is implied in the bill that large entities
bear responsibility to nurture small businesses," Subiakto told
journalists after giving explanations on the bill at a plenary
session of the House of Representatives yesterday.
He stressed that the government will not offer incentives to
medium-sized and large companies which help smaller ones. "It's
their responsibility, anyhow. So, they don't deserve incentives
for such partnership."
The long-awaited bill covers all aspects of small firms,
including the partnership between large and small companies and
the creation of a conducive business climate for small firms.
Subiakto said companies categorized as small firms are those
with maximum total assets of Rp 200 million (US$88,200),
excluding land and buildings, or those with maximum annual sales
of Rp 1 billion.
The minister said the calculation of small companies' assets
was based on the assessment of banks in providing loans for them.
Under the bill, banks are allowed to extend credit of up to Rp
250 million to small companies with maximum total assets of Rp
600 million and they generally provide loans with a ratio of
1:2.4 against assets. To receive a loan of Rp 100 million, for
example, a company is required to book total assets of Rp 240
million.
"The small businesses defined by the bill are companies or
cooperatives founded be Indonesians," Subiakto said.
He said the definition of small companies was intentionally
not related to the number of their workers because the
correlation between assets or sales and the number of workers
varies across business sectors.
The definition of small businesses in the bill is needed to
harmonize various definitions set by a number of governmental
institutions. The bill's definition will also be important for
banks in extending collateral-free loans as proposed by Minister
of Finance Mar'ie Muhammad two weeks ago.
Mar'ie said on Aug. 22 that the government was drafting
legislation to allow small businesses to obtain collateral-free
loans of up to Rp 50 million.
Subiakto said yesterday that medium-sized and large companies
which undervalue their assets in order to be categorized as small
companies could face severe penalties, ranging from temporary
suspension to permanent cancellation of their business licenses.
He noted that the bill also governs the partnership framework
between large and small companies, so that the large ones will
not acquire small ones illegally.
"Those breaking the rule could be fined up to Rp 500 million,"
Subiakto was quoted by Antara as saying. (rid)